It’s a scenario that may be familiar to you: You and your client have decided to apply for an individual disability insurance (IDI) policy. You have the client’s signature; the application is submitted. You’ve worked with your general agent to ensure the application is ready for underwriting, and you feel good knowing you’ve helped your client realize that income is an asset worth protecting.
Last year, the European Court of Justice (ECJ) ruled in a case brought by a man who claimed he was fired because he was obese. Did the ECJ ruling take obesity to another level by classifying it as a disability and not just a co-morbid or contributing factor in assessing one’s functional status?
The number of people who have had an experience of schizophrenia and are applying for life and disability insurance is small. Those that do represent a high-functioning cohort that are too often tarred with the stereotypes of poor outcome and high rates of suicide associated with the diagnosis. Rarely have these people been seen as individuals or had their risk appropriately assessed.
According to 2012 U.S. Census data, there are more than 21 million U.S. households with earnings between $100,000 and $200,000 annually, and more than 48 million households with earnings between $35,000 and $100,000.
Gen Re is pleased to report results for its 2013 U.S. Individual Disability Market Survey, an industry benchmarking study covering Non-Cancelable (Non-Can), Guaranteed Renewable (GR), Buy-Sell and Guaranteed Standard Issue (GSI) product line results for 2012 and 2013. Eighteen insurance carriers participated in the survey representing over $4.7 billion of inforce premium. Of these companies, 16 offer Non-Can, 17 offer GR and eight offer Buy-Sell. Seven companies reported Non-Can GSI and five reported GR GSI.
Life and DI insurers have been using “nicotine” tests routinely for over a quarter century. Nevertheless, there continue to be frequent issues between producers, their clients and underwriters regarding testing outcomes. Researching a lecture on anti-selection and fraud, I took a peek at what is out there about these tests on producer blogs. What I found makes this a high priority article.
Underwriting does not have to be a barrier to profitable DI sales. You might say underwriting DI is more akin to applying for a bank loan because underwriters need to have a good feeling and a detailed description of the risks they are considering.
One of the biggest barriers often cited by financial professionals as a reason not to discuss disability income needs with clients is a concern about handling less-than-ideal underwriting outcomes and managing customer expectations. Perhaps by understanding the way underwriters approach each case, you can begin to gain a broader perspective of disability insurance and its underwriting process.
Ninety-seven years ago, Solomon Huebner, founder of The American College, taught us that there are two kinds of death: dead death and living death. Either kind of death destroys one’s ability to earn an income, and the financial consequences are the same—earned income ceases.